That "Vision Thing"

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CHAPTER 1

THAT "VISION THING"
Picturing the Future When Your
Crystal Ball Isn't 20/20

Vision:

What Moses experienced when he wandered for too long in the desert; coordinated and persistent hallucinations characteristic of dementia or paranoid schizophrenia.

In the midst of his campaign for the presidency of the United States, George Bush confided to the press that he was feeling intense frustration. The source of his frustration? Not the economy, nor world affairs, but rather, as Bush put it, that "vision thing."

The situation in which Bush found himself is not unique. In companies around the globe, similar dramas are being played out as the demand for clearly articulated and compelling visions grows far faster than top management can supply them.

On the demand side are those, from the shop floor to the boardroom, who want their senior managers to provide a "vision" --a picture of the future for their organization. And not without reason; the reality of visionary management is that people truly do stretch more when they can put their actions in the context of goals that they can care about --and they truly do withhold potentially valuable contributions in the absence of such goals.

On the supply side of the market are the executives who are expected to deliver these visions. For some, communicating a compelling picture of the future is second nature; they would do so even if the management literature never spilled a drop of ink on the subject. For others, though, the pressure to articulate a vision only heightens their awareness of their ability to see only a glimpse of what the future might hold --a glimpse they worry is too vague or too incomplete to fulfill the requirements of a biblical-scale vision.

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The last thing IBM needs now is a vision." -Louis V Gerstner, in 1993, shortly after becoming chairman of IBM

"It's more fun building a bridge than putting sandbags on a levy " --Tom Whiteside, in 1993, shortly after leaving IBM to join MIPS Technologies Inc.
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The frequent result of this asymmetric market: employees who feel deprived when asked to work hard for a company that talks of nothing more than getting by, and managers who feel resentful when pushed to articulate a future that is unknowable.

And the imbalance is getting worse, as more people, having heard the folktales of business heroes and read the formal theory of business practice, conclude that a vision is the prerequisite for the success of their organizations. This is a boon for vendors of "visioning" services.

Yet the expectations about what a vision should be and how it can be generated are often deeply flawed on at least three counts: the desire for a vision to supply a 20/20 picture of the future; the presumption that a vision should provide a reasonably comprehensive blueprint for achieving this future; and the belief that a vision can be created through some broad-based participatory process.

All three of these expectations are unrealistic at best. First, visions are not, and cannot be, 20/20 pictures of the future; they are, rather, statements of organizational ambition, simultaneously highly specific and ill-formed, always uncertain and unclear in many respects, characterized by gaping holes and missing pieces.

Second, attempting to create start-to-finish blueprints as part of the visioning process typically adds hazards to an already hazardous process; in contrast, one way to increase the odds of achieving any vision is to proceed in a stepwise fashion, revising the approach, and sometimes even the goal, as events unfold.

And third, democratically based group processes do not necessarily lead to visions that will be implemented; the achievement of vision depends more on the deep, gut-level commitment of the person or people who control the critical resources of the organization than on the broadness of participation in the "visioning" process. A quartet of K's-- Komatsu, Kimberly-Clark, Kodak, and King Kullen- illustrates the points.

Forget Looking for a 20/20 Picture of the Future:
It's the Ambition That Counts

Thought about from the perspective of the physics of the matter, "vision" is an odd word to apply to the task of imagining the future, since vision is a sense that works only from the present to the past.

In fact, the further away we are from any object we are observing, the further back into the past we are seeing, which we can estimate by calculating the distance between us and the object and then dividing this by the speed of light, 186,000 miles per second. For relatively close objects, like the sun, the past state we see now occurred just under ten minutes ago.

For objects that are farther away, such as distant galaxies viewed through a telescope, the past state we see now occurred millions or billions of years ago.

In contrast, when we talk about visions for organizations, we are obviously talking about a sense that works from the present to the future. Given that these events haven't occurred yet, why would anyone expect that a future "vision" could provide anything close to a 20/20 view of precisely where the organization is going and exactly how it will get there?

One source of distortion in the acuity of a future vision is that since the future is, by definition, uncertain, visions can seem compelling, be followed with great ardor, and still be wrong. And though the point is always obvious in hindsight, it's remarkably easy to build a grand vision on what turns out to have been an astigmatic view of the future.

Roger Smith demonstrated this during his 1981-1990 chairmanship of General Motors. In this classic example, Smith clearly articulated his vision --to make GM into "the car company of the twenty-first century"-- and backed it amply, putting $8 billion into acquisitions (for EDS and Hughes Aircraft) to increase the company's technological competencies, and $40 billion into plant and equipment investments (for state-of-the-art automation) to decrease the company's labor costs.

Yet, with relatively little attention placed on building cars that consumers would see as better than GM's ever-improving competitors, the company's share of its domestic market plummeted, sliding from about 46 percent to less than 35 percent during Smith's tenure at the helm. And Smith is hardly alone; from General Electric's foray into the "factory of the future" to Sears's diversification into financial services, the road to failure has been paved with compelling but flawed visions.

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"For the same amount of money, we could buy Toyota and Nissan outright." -H. Ross Perot, speaking to GM management in 1986 (instant effect had Perot's suggestion been followed: an almost twofold increase in GM's share of the worldwide market, from 22 percent to 40 percent)

"Ah, but a man's reach should exceed his grasp, Or what's a heaven for?" -from "Andrea del Sarto," by Robert Browning (1812- 1889 )

"There are no recipes. There are no certainties that what I'm doing is going to work. You've got to go on instinct." -Louis V Gerstner, chairman of IBM
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And even when the vision is directionally correct, it is almost always still characterized by gaping holes and monstrous omissions. Recognizing that even prescient visions do not provide a 20/20 picture of the future, in 1986 C. K. Prahalad and Yves L. Doz. professors at the University of Michigan and INSEAD respectively, proposed an alternative concept, "strategic intent," which they defined as the process of "aiming for goals for which one cannot plan."

But whether the term used is "vision" or "strategic intent," the critical point is that such statements express the ambition of an organization, an ambition that must be clear in overall thrust but that inevitably will be unclear in a host of details.

The classic example of vision as ambition is the goal set in the 1960s by Yashinari Kawai and his son, Ryoichi, for the earthmoving equipment company Komatsu. Transliterated into English, the Komatsu vision was short and simple: "Maru-C" or, roughly, "encircle Caterpillar." At the time the Kawais set about turning this vision into reality, it would have been hard to imagine a more preposterous goal.

Caterpillar Inc. was the world leader, with sales of $1.4 billion and more than 50 percent of the worldwide earthmoving equipment market. The company was also universally known for the superior technology of its products and its production facilities, and for the unparalleled quality of both its equipment and its after-sales service.

Komatsu, on the other hand, had sales of only $168 million, no presence outside Japan, a limited product line, and little technical know-how. In addition, the company's reputation for the quality of its machines and service was dreadful-- "only half that of the international standards," as one senior Komatsu executive later put it.

Even more worrisome, in 1963, Japan's Ministry of International Trade and Industry (MITI), convinced that neither Komatsu or Japan would build a long-run competitive advantage in construction equipment, authorized a joint venture between Mitsubishi and Caterpillar. Given the enormity of the challenge, there was no way the Kawais could have provided a 20/20 view of what they meant by Maru-C. Yet by 1984, just over twenty years later, Komatsu held 25 percent of the world market for earthmoving equipment, with sales of Y713 billion (about $3 billion) and profits of Y23 billion (about $95 million), to Cat's 43 percent of the market, with sales of $6.6 billion and a bottom-line loss of $428 million.

Cat has recovered strongly since then, but Komatsu remains a powerful competitor, now a giant in its own right, having achieved what most people would have regarded in two as impossible when the Kawais first articulated their organizational ambition.

Or consider the vision set by Kimberly-Clark in 1920, then a Midwestern manufacturer of printing papers, to create and dominate a market for a new disposable so paper consumer product it had introduced the year before. The original ambition was simply that the new product be successful enough to fill the company's idle Cellucotton absorbent wadding capacity, which K-C had developed in 1914 as a substitute for cotton.

K-C needed a new product because, though Cellucotton sales were brisk during World War I -- a conflict in which, as John R. Kimberly later recalled, one of every two soldiers was either wounded or killed -- they fell precipitously after the armistice, thus leading to the unused capacity. The obstacles to K-C's 1920 vision of filling this capacity with its new disposable consumer product were huge, however, for three reasons. First, the company had never participated in a consumer products market. Further, in 1920, disposable paper goods represented, for the most part, a new product category; disposable paper plates, cups, towels, and diapers did not exist.

And finally, was the product itself: Kotex feminine protection, the first product of its kind, inspired by reports, as later described by John Kimberly, "that during World War I some nurses had packed Cellucotton in gauze and used the combination as sanitary napkins." It was, Kimberly subsequently noted, "a product that many people wouldn't stock, wouldn't sell, and wouldn't even talk about." But even though in 1920 K-C's executives could not provide a 20/20 picture of their ambition or how they would fulfill it, today K-C holds over 30 percent of the almost $1 billion U.S. sanitary napkin market-- and, with $7 billion in sales, the company is indeed a leader in the U.S. industry for disposable paper consumer goods.

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"Nobody in his right mind tries to cross a broad ditch in two steps" -Karl von Clausewitz (1780-1831)

"If at first the idea is not absurd, then there is no hope for it." -Albert Einstein (1879-1955) ----------------------------------------------

And finally, consider the vision set in 1870 that led to the development of the Eastman Kodak Company: the ambition of putting photography into the reach of the common person, by creating cameras that were affordable, lightweight, and easy to use.

In the 1870s, when George Eastman first formulated his vision, photography, in his words, was "an elaborate and painstaking ordeal" that required a wagonload of heavy and hard-to use equipment including "a camera about the size of a soap box [about the size of an orange crate today], a tripod heavy and strong enough to support a bungalow, a dark tent, a nitrate bath, and a container for water" --all necessary because at that time photographers had to develop and finish their negatives right where they took their photographs.

By 1888, following more than a decade of work, Eastman had created a camera system, which he later dubbed the "Kodak," that met his goal. The essence of simplicity, the camera had a string to set the shutter, a button to release the shutter, and a lever to advance the film, while the film could be sent back to Kodak for processing.

When he started, Eastman could not have provided a 20/20 picture of the future he envisioned for his company. But, as at Komatsu and Kimberly- Clark, success at Kodak began with a compelling ambition that was clear in its overall thrust --and unclear in many of its details.

In retrospect, tales of setting out to encircle larger competitors, invent new classes of products, and democratize complex technologies for mass markets seem like the stuff of which dreams are made, the kind of fully articulated visions that many insiders wish their own executive teams would provide.

But in fact, these visions, which now seem so clear and clean, were at the time grand stretches, precise and clear in some ways and hopelessly vague and unsubstantiatable in others --an important reminder that while a vision can crystallize the ambition of an organization, it cannot transmit a 20/20 picture from the future of what will be and how it will be achieved.

Forget the Quest for a Start-to-Finish Blueprint:
It's the Stepwise Approach That Increases the Odds for Success

Ambitions that are larger than an organization's ability to plan may seem an invitation to chaos. Yet as the case studies done by James Brian Quinn, professor at Dartmouth's Amos Tuck School, have illustrated, the real strategies, even of the biggest and most sophisticated organizations, tend to "evolve" through a process he calls "logical incrementalism."

Quinn's work suggests that any company that tries to adhere to a start- to-finish blueprint, with little deviation, reduces the odds for achieving its long-term goals if, as often happens, the future develops differently from what was anticipated.

An alternative is to craft the implementation of the vision step by step, reassessing the key assumptions on which the vision was based as events unfold. As followed by companies such as Komatsu and Kimberly-Clark, such stepwise approaches can be far more successful than relying on start-to- finish plans.

For the Kawais at Komatsu, for example, a key assumption was that the Mitsubishi-Cat joint venture jeopardized the company's very existence. Komatsu therefore immediately sought regulatory relief from MITI, in the form of a request to overturn the Mitsubishi-Cat joint venture; in response, MITI delayed the implementation of its decision for two years, until 1965.

Two other key assumptions held by the Kawais were that, with the Mitsubishi-Cat venture going forward, albeit with a delay, Komatsu's future success in the earthmoving equipment industry would require far more advanced technology and far better product quality than the company had at the time. Accordingly, for the next twenty years, Komatsu's strategy focused on strengthening the company in these two areas, one step at a time.

To make the needed improvements in its technology position, the company quickly built on its two-year reprieve to enter into technology agreements with International Harvester, Bucyrus-Erie, and Cummins Engine. In addition, to hedge its dependence on these foreign technology suppliers, in 1966 Komatsu also established its own R & D laboratory. By 1982, the company had found ways to terminate both the IH and Bucyrus- Erie licensing agreements. (As one senior Komatsu executive later remarked, "Komatsu had digested its licensed technology and had established its own technology. Therefore, we just got out of the various licensing agreements.")

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"If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them." -Henry David Thoreau (1817-1862)
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To make the needed improvements in its quality position, Komatsu again took advantage of its two-year reprieve and, building on the Total Quality Control effort it had begun several years earlier, initiated "Project A" --a full-court press aimed at improving the quality of Komatsu's bread-and-butter products: small- and medium-sized bulldozers.

The first Project A 'dozers appeared in 1966 with twice the durability of their predecessors and, despite a longer warranty period, a 67 percent decrease in warranty claims. The company then initiated the second phase of Project A: reducing the costs of the 'dozers. In 1972 came "Project B." which focused on improving the quality and then reducing the costs of Komatsu's main export, large bulldozers.

And in 1976, as worldwide demand for construction equipment began to slow, came the "V-10 campaign" with the goals of reducing costs by 10 percent while maintaining or improving quality, reducing the number of parts by at least 20 percent, and rationalizing the company's manufacturing capacity.

The beauty of Komatsu's incremental approach was not only that each step put the firm in a better competitive position than before, but also that each would have been worthwhile even if the firm had never come close to its overall goal of Maru-C.

At Kimberly-Clark, the core belief about the future was that disposable paper goods could replace nondisposable goods and that the company, with its paper technology and some perseverance and experimentation, could create and learn to market these new consumer products. Having started its campaign to create this new market with its invention and introduction of Kotex, K-C's next step focused on overcoming what Kimberly called the "taboos [against] the open discussion of feminine hygiene": 22 free packages to dealers for every 144 packages ordered, free samples to consumers, free samples to nurses, advertising campaigns, plain-paper packaging for retail counters, and massive educational campaigns. (The company also hedged its bets by creating, as John Kimberly later explained, a "separate company to promote and sell the new product without involving the established company [Kimberly-Clark] name." The subsidiary regained the K-C name in 1950.)

Buoyed by its success, in 1924 K-C took the next incremental step, and introduced its second disposable paper consumer product --a "sanitary cold cream remover" --based on another K-C wartime technology, this one a process for making cellulose into a very thin and soft paper fabric suitable for gas mask filters. The product, of course, was Kleenex. The company worked to make the tissues softer and stronger, and sales progressed modestly until K-C executives, increasingly hearing that women were using Kleenex as a hanky and not as a cold cream remover, commissioned some consumer research in 1930. The research found that 61 percent of the respondents thought of Kleenex as a handkerchief, 39 percent as a cleansing towel.

Inspired to change its advertising, K-C doubled its Kleenex sales over the next year, providing the cash flow to invest in new equipment for its disposal paper products businesses, and the impetus for a revised, broader ambition: to "change basic living habits for an entire nation by opening a whole new field of disposable paper products."

That the great visionaries of business follow a stepwise approach might not surprise great visionaries of another sort: chess players. A 1966 study that looked at the time taken by chess players to make a second move after their opponents had made theirs showed significant differences based on how expert the players were, with Class C players taking only a few seconds, Experts taking seven minutes, Masters taking ten minutes, and Grandmasters taking twenty minutes. The reason: the opponent's move provides an opportunity to reconsider the options on the board, an opportunity that the better players capitalized on fully. Similarly, organizations with great ambitions and overall schemes for achieving them still need to delineate the building blocks, plan the order in which they will be implemented, focus on the handful of top priorities, and then be willing to revise their bets according to the new set of circumstances.

As executed by companies like Komatsu and Kimberly-Clark, such stepwise approaches have three advantages. They mitigate the need for the "visionary" to have clairvoyant skills, since the approach for achieving the organizational ambitions is a work in progress. They increase the odds for an improved competitive position, even if the overall ambition is never met. And finally, they allow the company (or company unit) to spot and capitalize on opportunities or threats that it could not have foreseen at the beginning of the process.

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"Dreaming is zero-value. I mean anyone can dream.... Vision is free. And it's therefore not a competitive advantage any way, shape or form.... The big thing I do is I write down in a fairly crisp fashion what I believe the company should do.... I let people know the basic framework we're in and then I review projects." -Bill Gates, founder and chairman, Microsoft Corporation
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Forget the Broad-Based, Democratic Visioning
Processes: It's Those Who Control the Resources
Who Are the Gatekeepers to the Dream

Dreams and visions can originate anywhere in an organization. But if they require major amounts of any corporate resource that is in short supply- capital, R & D time, use of production capacity, or advertising dollars, for example --or if they require changes that go far beyond the implicit rules of "how we do business around here," they will require the buy-in of the unit head, CEO, or board, or anyone else with de facto power over the allocation of assets or the revision of rules. No matter what CEOs say about "flattening the organization" or about broad participation in the "visioning" process, whoever controls the resources is gatekeeper to the dream. (For more on flattening the organization, see "The Flat-Org Theory of Modern Management," pp. 39-50.)

Consider the saga of King Kullen. In 1930, in the midst of the Great Depression, the average grocery store was 500-600 square feet, had sales of about $500-800 per week, was located in the town center, and incurred high labor costs since few of the items were available on a self-service basis. Michael Cullen, age forty-six and the manager of the Herrin, Illinois, branch of the Kroger Grocery & Baking Company, was sure that these were the characteristics of an industry that would drive itself into obsolescence. Cullen therefore wrote to the vice president of Kroger, then a chain of small stores, with a better idea: transforming Kroger into a chain of supermarkets, starting with a trial of five stores, to be called, in his plan, the Cullen Stores. Here are just a few of the other details he described:

* average store size: 5,800 square feet (40' by 130'-160' deep)

* location: three blocks from the "high-rent district," with plenty of parking

* percent self-service: 80 percent

* expected revenues per week: $8,500 in groceries, $1,500 in fruit and vegetables, $2,500 in meat

* expected gross profit margin, based on detailed pro formas of operating expenses: 2.5 percent for fruit and groceries, 3 percent for meat

* pricing strategy: 300 items at cost, 200 items at 5 percent above cost, 300 items at 15 percent above cost, and 300 items at 20 percent above cost

* advertising strategy: two-page newspaper ads, announcing the availability of "300 items at cost and another 200 items at practically cost"

Today, Cullen's letter is remarkable for its comprehensiveness, audacity, and accuracy. Yet, the vice president not only turned down the idea, he wouldn't even see Cullen to discuss it further. Cullen went on to establish King Kullen, a Long Island, New York, chain that boasted fifteen supermarkets in 1935; Cullen died in 1936, before he could start implementing his ideas for national expansion. Kroger, meanwhile, had reconsidered the ideas that Cullen had proposed after he had left and, by 1935, had fifty supermarkets, six with parking lots. One can only wonder how much more of his dream Cullen could have realized had he been able to work with Kroger.

Visions are implemented when the people who control the resources believe, deep in their guts, that the ambitions being described correspond well to how their industries will evolve, or could evolve if they were to take a certain set of initiatives. If they don't like the person who proposes a new vision, need more data before they can develop gut-level commitment to the new idea, or have a different view about key future trends in their industry than that implicit in the proposed change in direction, they will be unlikely to dedicate the resources required for its implementation. Consequently, in the absence of data that fundamentally alter how these people view the future, visioning sessions will create lovely flip charts but little change in direction. For visions grow out of mindsets and passions, not mechanics and process, and any vision that does not capture the mindsets and passions of those who control the resources required for its implementation stands little chance for success.

Visions really can make a difference. In changing times, the future vitality of an organization often depends on fundamental shifts in the beliefs and behaviors of many people. But these shifts typically require giving up familiar ways of doing business, time-honored traditions, or cherished products. Visions are one way leaders map out these required changes and induce others to buy into them. Yet, without the commitment of those who control the resources, "visioning" becomes just another activity that marks the box on some "management excellence" checklist --but doesn't actually change what the organization is doing in a significant way.

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"The last little secret of vision is that ultimately it's in the eye of the beholder, and almost always after the fact.... [W]e rarely recognize a leader as having vision until it has been proven true." -Walter Kiechel III, editor, Fortune

"He started to sing as he tackled the thing / That couldn't be done, and he did it." -from "It Couldn't Be Done," by Edgar Albert Guest (1881-1959)
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Nor is there a standardized format for successful visions. Not all visions should be as grand as Komatsu's. Not every industry is ripe for revolution, and not every executive is cut out to be a pioneer. In contrast, many companies would do well to aim for providing products their customers want to buy and environments in which their employees want to work.

Similarly, not all visions need be as detailed as King Kullen's; though many visions celebrated today look as if they were unveiled with complete start-to-finish blueprints, most in fact are what we might call "post-strategic rationalizations," fully articulated only after the journey is complete. Business, like any other human endeavor, develops its own mythology for honoring its heroes.

For most organizations, the best option is for those who control the resources to understand their own assumptions about future industry dynamics, invite others in the organization to provide their viewpoints (and contribute evidence that is contrary to the prevailing points of view), and then, having considered these varying perspectives, articulate an ambition and build and modify it incrementally. Whether the resulting vision is grand or modest, an approach of this kind allows insiders to be rooted in reality while focused on the stars --a useful approach for navigating through a future that no one, not even visionary leaders, can know fully.

From Fad Surfing in the Boardroom, by Eileen Shapiro, Addison Wesley, Reading, MA: 1995, pp. 3-14.

Short Quote:

"If at first the idea is not absurd, then there is no hope for it." -Albert Einstein (1879-1955)

Author:	Shapiro, Eileen
Title:	That "Vision Thing"
Periodical:	IndustryWeek
Volume:
Number:
Publisher:
Place (City):
Publication Date:
Pages:
Source Type:	CompuServe
Quote Number:	117
Categories:	Mission, Strategic Planning